Both state budgets to be using new fiscal calculations

Published: Thursday, November 22, 2012 at 6:01 a.m.

Last Modified: Thursday, November 22, 2012 at 11:54 p.m.

MONTGOMERY — This year’s Education Trust Fund budget is not the only one created under a new financial system.

The Sept. 18 Amendment 1 vote that transferred $437 million from the oil and gas royalty Alabama Trust Fund also changed the way distributions from the ATF to the General Fund are figured.

This year’s education budget is the first under the new rolling reserve budgeting law that limits growth in the ETF to the rolling percentage average of the previous 15 years of tax income.

The ETF is an annual appropriation to public education. The total state appropriation this fiscal year is $5.42 billion, an amount largely supported by income and sales taxes.

One month into the new fiscal year, ETF collections were behind last year’s collections by 6.42 percent, from $349.3 million for October 2011 to $326.8 million last month.

The $1.84 billion General Fund this year received distributions from the Alabama Trust Fund based on a formula approved Sept. 18. The vote also approved the transfer of $437 million over three years to prop up the ailing General Fund.

Interest distributions from the ATF previously were made by committee.

The General Fund last year received a one-time transfer of $273.7 million because of miscalculations in the previous five years of distributions. This year’s distribution won’t be anywhere near that amount.

State Treasurer Young Boozer said the General Fund, which pays for general government operations will get $159 million, paid quarterly.

Boozer on Tuesday said the distribution formula going forward is 33 percent of the ATF royalties from two years prior to the current budget year. In addition, the distribution includes 5 percent of the three-year average of invested assets ending two years prior to the current fiscal year. “It is an automatic formula,” he said.

Based on known calculations, the amount available for next year’s General Fund will be $145.7 million. He said the decrease is because of the market’s performance and the withdrawal of more than $1 billion in principal from the trust fund over recent years.

In addition to voters approving the withdrawal of $437 million from the ATF, the Legislature withdrew $437 million from the education rainy day account that must be repaid.

Of that amount, $14 million was repaid this year and another $200 million to $250 million can be repaid next year, budget committee chairmen said. The entire amount must be repaid within three years.

Legislators and Gov. Robert Bentley vow to repay the $437 million transfer that voters approved in September.

Boozer said $161 million also is owed the General Fund rainy day account.

“There’s a very good chance it will grow,” Boozer said. “We’re in an adjustment period, we have a poor stock market, and we’ve had extraordinary withdrawals from the ATF.

“This is a better plan, you’re not caught off guard and you won’t be surprised,” he said. “This is a 21st century way to manage a trust fund.”

<p>MONTGOMERY — This year's Education Trust Fund budget is not the only one created under a new financial system.</p><p>The Sept. 18 Amendment 1 vote that transferred $437 million from the oil and gas royalty Alabama Trust Fund also changed the way distributions from the ATF to the General Fund are figured.</p><p>This year's education budget is the first under the new rolling reserve budgeting law that limits growth in the ETF to the rolling percentage average of the previous 15 years of tax income.</p><p>The ETF is an annual appropriation to public education. The total state appropriation this fiscal year is $5.42 billion, an amount largely supported by income and sales taxes.</p><p>One month into the new fiscal year, ETF collections were behind last year's collections by 6.42 percent, from $349.3 million for October 2011 to $326.8 million last month.</p><p>The $1.84 billion General Fund this year received distributions from the Alabama Trust Fund based on a formula approved Sept. 18. The vote also approved the transfer of $437 million over three years to prop up the ailing General Fund.</p><p>Interest distributions from the ATF previously were made by committee.</p><p>The General Fund last year received a one-time transfer of $273.7 million because of miscalculations in the previous five years of distributions. This year's distribution won't be anywhere near that amount.</p><p>State Treasurer Young Boozer said the General Fund, which pays for general government operations will get $159 million, paid quarterly.</p><p>Boozer on Tuesday said the distribution formula going forward is 33 percent of the ATF royalties from two years prior to the current budget year. In addition, the distribution includes 5 percent of the three-year average of invested assets ending two years prior to the current fiscal year. “It is an automatic formula,” he said.</p><p>Based on known calculations, the amount available for next year's General Fund will be $145.7 million. He said the decrease is because of the market's performance and the withdrawal of more than $1 billion in principal from the trust fund over recent years.</p><p>In addition to voters approving the withdrawal of $437 million from the ATF, the Legislature withdrew $437 million from the education rainy day account that must be repaid.</p><p>Of that amount, $14 million was repaid this year and another $200 million to $250 million can be repaid next year, budget committee chairmen said. The entire amount must be repaid within three years.</p><p>Legislators and Gov. Robert Bentley vow to repay the $437 million transfer that voters approved in September.</p><p>Boozer said $161 million also is owed the General Fund rainy day account.</p><p>“There's a very good chance it will grow,” Boozer said. “We're in an adjustment period, we have a poor stock market, and we've had extraordinary withdrawals from the ATF.</p><p>“This is a better plan, you're not caught off guard and you won't be surprised,” he said. “This is a 21st century way to manage a trust fund.”</p>